As incomes rise, Indians are opting for more feature rich, safer and powerful cars

No-frills is passe. Thanks to rising incomes, Indians are now opting for more feature rich, safer and powerful cars.

While unveiling the Tata Nano at the 2008 Auto Expo, Ratan Tata, the then chairman of the Tata Group, spoke about how the sight of a family of four on a scooter – the father driving it with a young kid standing in the front, behind the handlebars and wife sitting behind him with another child on her lap – had moved him so much, he wanted to give Indians a better option. A no-frills budget car that would not pinch the pocket but provide the means to commute in a safer more efficient way.

In theory, Tata’s logic cannot be

faulted. Mobility drives aspirations and anybody on two wheels today would dream of four for tomorrow. As the largest two-wheeler market in the world — over 20 million of them were sold last fiscal — India provides the best opportunity for the success of an ultra low cost car. At least on paper. Yet, that has not translated into reality. Nano’s failure – in part due to quality issues and a cheap car not finding favour with status conscious Indians – is well documented but the entire entry level mini car segment in the country is stagnating. Along with Nano, Nissan’s

sub-brand Datsun, conceptualised by its chairman Carlos Ghosn on a premise similar to the Nano, has also not exactly scorched the sales charts. Similarly, Hyundai Eon is one of the Korean carmaker’s underwhelming models and the Renault Kwid, after a strong first year, has not been able to sustain the momentum.

Even the Alto, India’s best selling car for 14 years, is well off its peak sales in 2010/11.

The days when consumers would lap up affordable and fuel efficient cars are over. In the most significant shift

in consumer preference in the passenger vehicle industry, consumers today want safer, feature rich and more powerful cars. Higher disposable income means they are not unwilling to pay a premium for it as well. That explains why premium hatchbacks, compact sedans and sports utility vehicles are so much in vogue today. A Hyundai Elite i20 outsells the Eon by more than two times, Maruti’s Baleno outwits a Wagon R while a Creta finds more takers than an antiquated Mahindra Bolero. “The Indian consumer preference is changing. He does not only want a budget car anymore but he wants features, power and better styling and safety,” says Kenichi Ayukawa, Chief Executive Officer, Maruti Suzuki India Ltd. “Earlier affordability was the biggest factor. It still is important but there are other considerations too.”

It is this shift in the market that prompted Maruti, the leader of the pack with a 50 per cent market share, to set up a completely new distribution network— Nexa, in 2015. It sells the premium hatchback Baleno, crossover S Cross and another hatchback Ignis. Last year, Maruti sold over 300,000 cars at Nexa that would in isolation make it the third